Stop Crapping on Startups

Michael O. Church recently wrote a thought provoking blog post, “Don’t Waste Your Time in Crappy Startup Jobs“, and the author clearly put a lot of thought into writing the piece. Based on the comments and the retweets, it appears the article hit home for quite a few people. I think the article’s title might sway a reader’s interpretation a bit, or readers may simply see it as ‘Don’t Waste Your Time in a Startup’. I’m sure that wasn’t the intent of the article, but based on some of the comments, that sentiment seems to be the takeaway for many.

The crux of the article is a list of seven misconceptions that the author chooses to dispel one by one. I’d like to take each of them and see if these are truly problems with start-ups, problems with the engineering industry, or even problems with expectations. (Mr. Church’s excerpts are in red, my comments follow)

1. A startup will make you rich.True, for founders, whose equity shares are measured in points. Not true for most employees, who are offered dimes or pennies.”

First, I don’t think most engineers that join startups are expecting to get rich these days, and even founders aren’t all expecting to get rich. If you had written this in 1999, I’d agree this is a common misconception. Most employees in my experience see stock options or equity grants as ‘lottery tickets’, that they realize probably won’t pay off – but they also understand that you simply can’t win if you don’t play.

“Moreover, raises and bonuses are very uncommon in startups. It’s typical for high performers to be making the same salary after 3 years as they earned when they started. (What happens to low performers, and to high performers who fail politically? They get fired, often with no warning or severance.) “

I don’t see bonuses or raises as uncommon in the start-ups I’ve worked with. My current client list includes a handful of startups that all offer bonus, and historically I’ve seen employees getting raises and bonuses from startups that are on par with some of my larger clients. And low performers being fired without warning or severance? Is that a startup problem specifically? Low performers or people who ‘fail politically’ are firedin any sized company, the only difference may be severance. Again, this is not a ‘crappy startup problem’.

2. The “actual” valuation is several times the official one. “In truth, startup employees should value equity and options at about one-fourth the valuation that VCs will give it. If they’re giving up $25,000 per year in salary, they should only do so in exchange for $100,000 per year (at current valuation) in equity.”

I usually advise candidates that they may want to weigh any equity simply as a chance to receive some additional compensation, and I’d generally advise them not to accept any offer that won’t afford them to live a lifestyle that makes them comfortable. If you can’t afford a 25K pay cut, don’t take one.

3. If you join a startup early, you’re a shoe-in for executive positions.

Again, I just don’t think engineers are this naive today to believe this, or at least not the people I know.

“Not so. In fact, one of the best ways not to get a leadership position in a startup is to be there early.”

I’d love to see if any actual scientific evidence exists to back this claim up, but I wouldn’t know where to find it. For every engineer you can name that did not get a leadership spot, I’m sure someone else can name one that did. Again, in my experience I generally see that engineers who join early on are rewarded with leadership roles that they are qualified to do. Being the first or second engineering hire at a startup doesn’t automatically give you the qualifications to be CTO, and if you expect you should be CTO/VP just because you were an early hire you probably need to rethink why you are joining the company.

“Startups often involve, for engineers, very long hours, rapidly changing requirements, and tight deadlines, which means the quality of the code they write is generally very poor in comparison to what they’d be able to produce in saner conditions. It’s not that they’re bad at their jobs, but that it’s almost impossible to produce quality software under those kinds of deadlines.”

True on hours, deadlines, requirements, and perhaps the code could be better in ideal conditions. I hear anecdotes all the time from engineers at large companies telling me how much free time they have with their highly reasonable deadlines and fully developed requirements being written in stone. Wait…no I don’t! Again, not a ‘crappy startup problem’ – it’s the nature of the software game overall, just a bit amplified.

“It may have been a heroic effort to build such a powerful system in so little time, but from an outside perspective, it becomes an embarrassment. It doesn’t make the case for a high-level position.”

From an outside perspective, companies that may hire these engineers down the road will most likely respect the experience those engineers had in building the product under less than ideal conditions. Most hiring managers from outside firms won’t know whether the product was some epic flop anyway.

“Once the company is rich and the social-climbing mentality (of always wanting “better” people) sets in, the programmers will be replaced with more experienced engineers brought in to ‘scale our infrastructure’… The old engineers probably won’t be fired, but they’ll be sidelined, and more and more people will be hired above them.”

Well that was depressing. I’d say, more likely, once the product is built and the company can hire more engineers, the developers that were there in the beginning now have accomplished their goal and will make the choice to move on. The mentality of this type of engineer is to build something, but they may not want to maintain it. Once that excitement is gone for this type of engineer, they will go voluntarily.

“Frankly put, being a J.A.P. (“Just A Programmer”) in a startup is usually a shitty deal. Unless the company makes unusual cultural efforts to respect engineering talent (as Google and Facebook have) it will devolve into the sort of place where people doing hard things (i.e. software engineers) get the blame and the people who are good at marketing themselves advance.”

Is J.A.P. a great deal at other companies? There are plenty of established companies that don’t pay engineers great salaries, and work them long hours. I think the key point is the cultural efforts to respect engineering talent. My clients tend to love and respect their engineers, which is why I disagree with many of these stereotypes.

4. In startups, there’s no boss. This one’s patently absurd, but often repeated. Those who champion startups often say that one who goes and “works for a company” ends up slaving away for “a boss” or “working for The Man”, whereas startups are a path to autonomy and financial freedom.”

No boss? I must admit, in my 15 years of tech recruiting I’ve never heard this one before. Who are these people that you are talking to? I’d say startups are a potential path to financial freedom, whereas working for an established company (with no ‘lottery tickets’) is probably not going to get you to early retirement.

“People who really don’t want to have “a boss” should not be looking into VC-funded startups. There are great, ethical venture capitalists who wouldn’t go within a million miles of the extortive shenanigans I’ve described above. It’s probably true that most are. Even still, the power relationship between a founder and investor is far more lopsided than that between a typical employee and manager. No manager can legally disrupt an employee’s career outside of one firm; but venture capitalists can (and sometimes do) block people from being fundable.”

How did we get from having ‘no boss’ to extortion by VC’s and managers? A manager disrupting an employee’s career outside of one firm??? WTF? Lemme guess...the author had a very bad experience?

5. Engineers at startups will be “changing the world”.With some exceptions, startups are generally not vehicles for world-changing visions. Startups need to think about earning revenue within the existing world, not ‘changing humanity as we know it’.”

This might work on a small subset of 22 year old kids, but I think most people know they aren’t going to change the world.

“…but people should understand that their chances of individually effecting global change, even at a startup, are very small.”

The likelihood of ANYONE effecting global change is incredibly small at a startup, and probably just as small at a large company. Again, this isn’t a ‘crappy startup problem’.

6. If you work at a startup, you can be a founder next time around.

Why not? No, seriously – why not? Working at a startup doesn’t exclude you from being a founder next time, does it?

“What I’ve said so far is that it’s usually a sh*tty deal to be an employee at a startup: you’re taking high risk and low compensation for a job that (probably) won’t make you rich, lead to an executive position, bring great autonomy, or change the world.”

If you assume there is high risk and low compensation for every startup job, I’d agree. Jobs with established companies don’t always pay well, rarely make you rich or lead to an exec position, and almost never allow you to change the world. If that is how you define a crappy job, all jobs are crappy.

7. You’ll learn more in a startup. This last one can be true; I disagree with the contention that it’s always true. Companies tend to regress to the mean as they get bigger, so the outliers on both sides are startups. And there are things that can be learned in the best small companies when they are small that can’t be learned anywhere else. In other words, there are learning opportunities that are very hard to come by outside of a startup.”

So you won’t necessarily learn more in a startup, but there are unique opportunities to learning in a startup. This sounds like a feature, not a bug. Are there unique opportunities in larger companies to learn things that you can’t learn anywhere but in the larger company? Perhaps.

“Startups are generally too busy fighting fires, marketing themselves, and expanding to have time to worry about whether their employees are learning.”

Fighting fires is a great metaphor here. Do you know the best practice for fighting fires? It’s actually fighting fires. Of course, there is danger in that, but engineers learn much more by being in those environments than they do in a completely comfortable setting. It’s not about a company that can afford (both time and money) to send you to a training seminar, it’s about learning on the startup job how to build something under tough conditions.

CONCLUSION

In conclusion, the problem with Mr. Church’s article isn’t that startup jobs are crappy. It’s that the author feels that many people may have certain unrealistic expectations about startup jobs. It assumes that all startups work you to death and pay you nothing, and that simply isn’t the case. It’s a stereotypical assumption, and it’s dangerous one.

If you take any job and expect that you will absolutely:

1 – get rich2 – become an executive3 – have no boss4 – change the world5 – found a company within x years6 – learn more than everyone else

then I can assure you that you will be VERY disappointed, no matter the size or age of your new employer. I sense that people have more realistic expectations than Mr. Church gives them credit for, and the people I know in 2012 certainly do. A more appropriate title for his article would have been ‘Don’t Join a Startup with 1998 Expectations’.

11 comments

This sounds like a sales pitch from a recruiter worried about his head-hunting prospects. You seem to equate the whole problem all down to employee “expectations”, rather than the structural problems in badly run companies that Church is highlighting – a sure fire way to turn off your audience! Goodbye

Mike – Thanks for the comments. This wasn’t designed as a sales pitch (biz is good) as much as a defense of start-ups that don’t fit the stereotype Church mentions (and perhaps your experience with start-ups was negative, as is obvious that Church’s was). There are certainly problems in certain companies as Church did highlight. My primary issue with the article is that the myths and misconceptions he is trying to expose are based on some pretty ridiculous stereotypes. For example, his first point being ‘Start-ups will make you rich’. Seriously? So he thinks that people still join start-ups with the expectation that he/she will be rich? It’s absurd, and anyone who has those expectations when joining a start-up should get some guidance.

Of course this is about expectations. #1 – If you expect to get rich, you will be disappointed. #3 – If you expect to be the CTO just because you were hire #2, you will be disappointed. #5 – If you expect to change the world, you will be disappointed. #7 – If you expect to learn more than everyone else, you will be disappointed. That is exactly what his article is about and to think otherwise is to ignore half of his points.

I’ll cede that a few of his points may be valid critiques, such as valuations and VC relationships, but other than that the article could have been rewritten as a list of proper expectations when joining a start-up.

I’ll admit that the article does point to a couple potential systemic problems, such

“True on hours, deadlines, requirements, and perhaps the code could be better in ideal conditions. … Again, not a ‘crappy start-up problem’ – it’s the nature of the software game overall, just a bit amplified.”

BTW, all credibility was gone when I read this. Anyone who accepts that chaotic anarchy is just the nature of software, doesn’t know what they’re talking about. Maybe you haven’t heard any praises from engineers in properly run agile environments because they’re happy with their jobs…ya thunk?!

“I hear anecdotes all the time from engineers at large companies telling me how much free time they have with their highly reasonable deadlines and fully developed requirements being written in stone. Wait…no I don’t!”

Mike – I think you missed the point, perhaps the sarcasm was not understood. There are chaotic organizations both large and small. I wasn’t trying to say that every engineering group was chaotic, but rather that the size isn’t a key factor in that. I have had F1000 clients that have a good deal of chaos, and have worked with numerous start-ups that deliver on time and get their engineers home for dinner. So again, not a crappy start-up problem exclusively. When positioned this way, I hope you would agree (unless you think that all large companies run smooth?).

I worked for a couple of startups where I was getting paid $20k-$40k(including health insurance and 401k benefits) less than the offers from big companies. The pitch I got from the management of those companies was that the small equity percentage I got for being JAP would more than compensate from any salary loss after the company went public or was acquired. Now, maybe the startups I worked were on the low end of the startup pay scale or maybe I was naive being just out of college. However, I don’t think #1 is the straw man argument that you make it out to be.

Sean – Thanks for the comment. I think you hit it on the head with ‘naive’, and that is what Church seemed to assume in his article. There was a time when everyone from new grads to experienced engineers all got starry-eyed when thinking about getting rich from start-ups. That time was 1999, and if people are still expecting to get rich from a start-up they should open a history book.

Having the opportunity to possibly get rich is a huge draw of a start-up, but having that as an expectation is incredibly naive. I assumed when I wrote this article that recent grads had done some homework on the history of the start-up market. I represent lots of start-ups as a recruiter, and I never even mention a word about getting rich. You are more likely to get rich than you will at an insurance company, naturally, but the likelihood isn’t much different than a lottery ticket. If you buy lottery tickets, you don’t go out and buy new cars and a boat before the drawing, do you? If people truly ‘expected’ to get rich off start-ups, they would make more irrational decisions like that.

Well, if stock options are just lottery tickets, or in other words almost worthless, then I would argue it’s irrational to work at any start up that won’t match or at least come very close to matching your salary offers from the larger companies. If your risk profile is such that you want some chance of getting rich, you could buy $5k of actual lottery tickets and bank $15k for a mortgage instead of taking a $20k pay cut. Since startups in general want you to work more hours than larger companies, startups should probably be paying slightly more on average than the larger companies to compensate you.

Brad – So you define irrational behavior as taking any offer that is not the highest salary/compensation offer you receive? That is short-sighted behavior. The experience of working in a start-up has some value beyond the lottery tickets.

My argument was/is that people in 2012 are less naive about start-ups than they were in 1999, and most that join start-ups are not simply joining for the lottery tickets.

You are looking to recruit people to work for startups. In other words, the more people you get to work for startups, the fatter your wallet becomes.
That of course completely undermines your credibility.